The collapse of a long-sought Navajo-Hopi water settlement this month represents a lost opportunity for the tribes to secure reliable water supplies and for Sen. Jon Kyl to close one last tribal deal before he leaves office in January.

Native American water controversy

Navajo lawmakers voted July 5 to reject the agreement and Kyl’s enabling legislation, which would have authorized funding for water-delivery projects. The Hopi Tribal Council on June 21 narrowly approved the settlement but voted down Kyl’s bill, a necessary component of the deal. The settlement required the approval of both tribes to move forward.

Support for the agreement eroded after Kyl introduced the bill in February. Opponents framed the deal as unfair to the tribes, claiming its central component awarded groundwater that already belonged to the reservation communities.

They also seized on a provision that offered the Navajos extra water if tribal leaders agreed to extend the land lease for a power plant near Page.

The tribes could still try to salvage pieces of the settlement, but time has nearly run out to reintroduce it in Congress, where attention is focused almost exclusively on the election.

Once Kyl retires, the tribes will lose their strongest and most knowledgeable advocate and the driving force behind many of the state’s key water deals. Without a settlement, the tribes’ claims to water would be decided in court, an option that would offer no guarantee of water and no promise of federal assistance to build pipelines, leaving thousands of people with a future of hauling water across the sprawling reservations.

“It’s very disappointing,” said Kyl, R-Ariz. “They have a water right, and they should get it. We have a responsibility to try to get it to them. I would have liked to be able to do that for the people I represent. I’m afraid this might have been their last chance.”

The Navajos and Hopis represent the largest unsettled tribal water- rights case in Arizona . The failed agreement would have satisfied claims on the Little Colorado River and resolved disputes over groundwater aquifers beneath the two reservations. Claims on the mainstem Colorado remain mired in negotiations over funding and the availability of water.

Kyl, a water attorney before being elected to the Senate, has helped broker deals with other tribes, including an agreement with the Gila River Indian Community in 2004, the largest tribal settlement in U.S. history. The Navajo-Hopi deal would have been his last as a senator.

“He was always finding a way to break the logjam,” said Dave Roberts, water-rights manager for Salt River Project, whose rights on the Salt and Verde rivers make it a player in many tribal cases, including the Navajo and Hopi deal.

“We can work on the agreements here,” Roberts said, “but if we don’t have a strong advocate, someone with the knowledge to work on it in D.C., to educate others in Congress about how things work and what the long-term benefit is, we’d be stuck.”

Like most of the tribal agreements, the Navajo and Hopi settlement included a multitude of non-Indian interests. Among them were SRP, Flagstaff , water users on the upper stretches of the Little Colorado and the Central Arizona Project, which oversees some of the water available for tribal claims.

Although the Navajo and Hopi claims focused on the Little Colorado River, the CAP brought to the table 6,411 acre-feet of mainstem Colorado water if the Navajo Nation would work to extend land and coal leases for the Navajo Generating Station.

An acre-foot is 325,851 gallons, enough to serve two families for a year in urban settings but enough to serve significantly more people on the Navajo Reservation, where water hauling keeps use low.

Power-plant provisions

The power plant, on the Navajo Reservation outside Page, provides almost all the power to move water through the CAP Canal from the Colorado River at Parker to Phoenix and Tucson . The CAP buys the power at reduced rates and would be forced to charge more for water without the plant. Its leases expire in 2019.

Kyl said there would have been no agreement without the power-plant leases. But critics of the plant, who targeted the pollution and the coal mining, used the issue to undermine the agreement, filling the audiences at public hearings leading up to the votes.

Elsa Johnson, a Navajo activist who led some of the opposition efforts, said the Tribal Council’s vote showed that ordinary people could wield as much influence as the companies that own the power plant and the coal mine near Kayenta.

“We’ve been treated like an unwanted stepchild by these corporations and other entities for far too long,” she said. “They have profited in the hundreds of millions and billions off our resources while we endure health and environmental impacts.”

Supporters of a water settlement say they’re not sure what would happen if they tried to propose a deal without the power-plant provisions.

The extra water would be off the table, but tribal leaders might be willing to advance a measure based solely on the groundwater projects and Little Colorado River claims.

An earlier settlement proposal did not include the power plant. That version addressed claims on the mainstem Colorado and called for construction of a pipeline to deliver water from the river to the reservations. When the pipeline plan was dropped because of its high cost, the Colorado River deal also fell apart. The power plant incentives were then added to bring the extra water to the table and retain support from all the parties.

“It seemed like a good majority of the ‘no’ votes on the council were because of the power-plant provision,” said Leo Manheimer, a member of the Navajo Nation Water Rights Commission, which endorsed the Little Colorado settlement.

“I think if there’s ever an opportunity to go back and see what the council would do without these provisions, that would be something we would be willing to try to work on,” he said. “But our window of opportunity is small.”

When that window closes, so will many of the advantages of settling claims out of court, Manheimer said. The rejected deal would have secured water from the Little Colorado and protected the river from further development upstream. It would have placed limits on groundwater use by cities and other non-Indian entities near the borders of the two reservations, slowing the depletion of aquifers.

Congress also could have authorized money to build delivery pipelines to Hopi villages and Navajo communities where existing wells often fail to meet demand. In some areas on the southern Navajo Reservation, shallow alluvial wells dry up during a drought, Manheimer said.

Navajo President Ben Shelly said he was disappointed by the council’s votes to reject the agreement and the legislation. He said he would have preferred to see lawmakers amend the proposal to eliminate provisions they didn’t like, but he accepted the outcome.

“The people had the opportunity to learn the details about this complex issue from the day it was brought into public,” he said in a written statement. “We didn’t hide anything. I also stood by my promise to get water infrastructure to the people. We need to get them running water, and this settlement was a good way to do so.”

Although the Hopi Tribal Council rejected Kyl’s legislation, it endorsed the settlement, and tribal officials said they were willing to work on amendments to the bill, mostly to remove the power-plant provisions.

Kyl seemed especially disappointed that the Navajo council didn’t leave that same door open. He said he invited the tribe to help craft amendments, but the council simply voted to reject the bill, an approach that hurt any chance to reopen negotiations with the other state interests. Pursuing the claims in court, he said, “will cost a lot of people a lot of money.”

“There will be a court decree, the tribes will ‘win’ money, but then what will they have? They will have a piece of paper that says they’re entitled to so much water. They have that now,” Kyl said. “With a settlement, they actually get the money to build projects to get water to people. That’s not going to happen if it just goes to court.”

[The following letter was written by former Hopi Tribe chairman Benjamin H. Nuvamsa from Shungopavi. He presented the letter to the Hopi Tribal Council on Friday January 13, 2012]

January 13, 2012
Hopi Tribal Council
Hopi – Tewa Senom

It is time we have a serious discussion about coal mining on our reservation, our water rights and our environment. For far too long, we have pushed these issues aside, not willing to talk about how these issues impact our lives. We must talk about how the Peabody Western Coal Company and Navajo Generating Station are affecting our lives. Since the mid 1960’s, Peabody Coal has been mining our coal, pumping our precious Navajo Aquifer water and paying us pennies on the dollar in return. Navajo Generating Station is emitting dangerous and harmful particulates into the air we breathe. Our coal resources are being depleted. Our Navajo Aquifer has been damaged and is decreasing. Our drinking water supply is contaminated; and our sacred springs are drying up. And, our people are suffering health problems from the mining activity and production of electricity. But who is really benefiting from this mining?

Most people know about how Attorney John Boyden, with the help of the Interior Department, managed to negotiate coal leases designed to benefit the coal mining industry and the utility companies. They literally stole our coal and water right from under us; and we allowed it to happen. We were sold a bill of goods by Boyden. Sadly, we are still allowing this to continue as evidenced by the latest Hopi tribal council’s action to approve the Peabody Lease Reopener.

Our elected leaders are being told by Peabody Coal, Office of Surface Mining, and by the Salt River Project (and other owners of the Navajo Generating Station) that if they did not approve the lease reopeners, that our tribal economy would suffer. I do not believe this story. It was the Federal government, in the first place, that determined what our economy would be; who would mine our coal and use our water; and literally what price we would be paid. The Federal government created a monopoly for Peabody Coal. Although it is our water and our coal, we were not allowed to make these decisions. We could not exercise our inherent sovereign right to determine our own economic future. Those decisions were taken away from us when the Federal government pushed the coal leases with Sentry Royalty (Peabody’s predecessor). We did not have control over our resources and our economy. We still don’t. The Federal government designed these leases so that we would become dependent on coal royalties.

So what happens with the money we get from Peabody Coal? We get a mere $11.0 to $13.0 million each year from Peabody Coal in the form of coal royalties and some bonuses. This money is put into an investment account at the Department of Interior’s Office of Trust Funds Management in Albuquerque, but most of it is given to the Hopi Water and Energy Team for their travel and other expenses. Most of this money is used by attorneys and other specialists to produce biased reports that our resources are safe and have not been damaged. Hopi and Tewa Senom have no say in how this money is used. Very little, if any of this money is used to create jobs and help villages.

So, as owners of the resources, we have to ask hard questions, such as: Do we really need coal mining on our reservation? Is it worth the loss of our resources? Is it worth damaging our resources and environment? Is it worth the health and welfare of our people? Again, we must ask: Who is really benefiting from coal mining on our reservation? Peabody Coal is a global company. The ten-year coal leases give Peabody Coal full subsurface rights to our coal, water and other minerals (except oil and gas). The leases give Peabody Coal full rights to the millions/billions of tons of our coal for which they do not pay us anything until they mine the coal. Because of how the leases are structured, we cannot market our coal to other companies to get better prices and have a say on how our coal is mined.

Peabody Coal reported that in October 2011, its net income rose to $274.1 million, or a rise of 22.3% from last year. Its revenues rose 9.2% to $2.04 billion from last year. The Navajo Generating Station buys the coal from Peabody Coal to produce electricity. The power plant is owned by the Bureau of Reclamation (24.3%) Salt River Project (21.7%), Los Angeles Water & Power (21.2%), Arizona Public Service (14.0%), Nevada Power (11.3%), and Tucson Gas & Electric (7.5%). Salt River Project recently reported a profit of over 26.0% in 2011. Peabody Coal, in its 2005 report, said it paid the State of Arizona about $67.5 million during the period 1986 to 2004; and paid the Navajo Nation over $82.9 million in various forms of taxes during the same period. Hopi did not and does not receive any tax revenues because of a reported covenant to not tax Peabody. So, who is benefiting from coal mining?

So what should do? Should we continue coal mining, or should we enter into alternative forms of energy production, or should we just stop coal mining? In any event, we must exercise our sovereign right to decide for ourselves, and decide our own economic future; and no longer allow the Federal government, owners of the Navajo Generating Station, and Peabody Coal to dictate our economy to us.

The Hopi Tribe (and the Navajo Nation) holds the key to the economy of the entire Southwest. It is our coal and water that makes it possible for Arizona, southern Nevada and southern California to have electric power. And, while others profit handsomely from our diminishing resources, our tribal socioeconomic conditions remain dismal. We get no direct benefit from coal mining revenues, we have limited or no jobs, our homes are in disrepair; and many of us do not have electricity and running water in our homes. After almost 50 years, we have nothing to show how coal mining on our reservation has improved our lives.

Our economic future starts with a serious round of discussions; adoption of sound energy and water policies; and renegotiating the Peabody Coal leases to demand higher prices and accountably for the damage they have done to our resources. It also starts with the tribe imposing taxes on Peabody Coal. It starts with requiring the Navajo Generating Station to comply with strict Federal emissions control regulations. And, it starts with holding our trustee, the Federal government, to carry out its trust obligations to us.

Enclosed is a copy of a presentation on Peabody Coal Leases that was presented at our recent “Water is Life” forum on November 12, 2011, held at the Hopi Veterans’ Memorial Center.

As you may know, the Hopi Tribe and Navajo Nation entered into three separate leases with Sentry Royalty Company (predecessor to Peabody Western Coal) beginning in the mid-1960’s. The Navajo Nation has a “Navajo Exclusive” lease (No. 8580) and shares another lease with the Hopi Tribe (No. 9910). Peabody pays 12.5% of monthly gross realization (royalty) on Lease 8580 to Navajo; and pays 6.25% monthly gross realization to both Hopi and Navajo under Lease 9910. The leases now provide for renegotiation every ten years, referred to as “Lease Reopener”. Lease 9910 has not been formally approved by Hopi although it was due for renewal in 2007. Navajo approved its portions in April 2011.

Coal from the Black Mesa Mine was dedicated to the Mohave Generating Station (MGS), but MGS shut its operations in 2005. Today, very little if any mining is occurring in the Black Mesa Mine area. Coal mined on the Kayenta Mine area is delivered to NGS and royalties are shared by the two tribes under Lease 9910 Lease; and Navajo receives all royalties under is lease, No. 8580.

Since the inception of the leases, Peabody Coal has not paid Hopi and Navajo at current fair market prices for the coal it mined and the water it pumped for mining operations. During its heyday, Peabody pumped over 3.3 million gallons each day from our precious Navajo Aquifer to slurry coal, over 275 miles from Black Mesa to MGS in Laughlin, Nevada. Since it began mining, Peabody mined over 400 million tons of coal from the Black Mesa and Kayenta mines.

If you review the leases, you will find the leases provided only for leasing of surface acres. No consideration was made on the value of the massive coal and water deposits that were the subject of the leases. No appraisals or valuation of the coal and water deposits were made to determine the fair market value of these resources. As a result, the tribes lost millions, if not billions, of revenues since the inception of the leases. Yet, by virtue of the leases, Peabody obtained exclusive subsurface rights to our vast deposits of coal and water without paying a dime for them. We (the tribes and the federal government) allowed Peabody to build a considerable company portfolio at our expense. This coal and water became an asset to Peabody that it would leverage for other business ventures. Tribal coal and water were “locked in” for the duration of the leases and tribes could not re-negotiate the terms of the leases, or could they leverage the resources. The leases effectively kept the tribes from diversifying their respective economies because the tribes lost control over the resources.

In a typical business scenario, a company would buy raw materials that it would use in manufacturing its products. Not so under the Peabody coal leases. The tribes received no upfront payments for the coal and water Peabody secured under the leases. Instead, tribes are compensated minimally (12.5% and 6.25% gross monthly realization) when Peabody sells the coal to NGS. Incidentally, the royalty rates were the subject of the Racketeering Influenced and Corrupt Organizations Act (RICO) which is a matter for later discussion.

Peabody and owners of NGS receive considerable benefits from the production and sale of electricity using our coal and water. Yet the tribes do not participate in the sharing of profits. See the Value Chain chart in the presentation. The chart depicts that owners of NGS (Arizona Public Service, Tucson Gas & Electric, Bureau of Reclamation, Salt River Project, Los Angeles Water & Power, and Nevada Power) are also “customers” of NGS.

Concerning tax revenues, while the Navajo Nation and the State of Arizona receive some tax revenues, the Hopi Tribe receives no tax revenues because it does not impose taxes on Peabody because of a reported covenant to not tax Peabody. In its 2005 report, Peabody reported that the Navajo Nation received over $82.9 million in various forms of taxes during the period 1986 to 2004, while the State of Arizona received over $67.5 million during the same period.

Payments made by Peabody are not commensurate with the profits they earn from our resources. Hopi only receives about $11.0 million to $13.0 million in royalties and other benefits each year from Peabody, very little, if any, of which goes to our people. But Peabody reported that its revenues rose 21% to a record $2.0 billion; and its operating profits rose 41% to $458 million for the Quarter ending June 2011. Peabody’s Chairman and Chief Executive Officer alone received a salary of $11.9 million in 2009; and its Executive Vice President and Chief Financial Officer earned $4.1 million. And the Salt River Project recently reported a profit of over 26% in 2011.

After almost 50 years of mining, we have nothing to show how the mining of our coal and the pumping of our precious Navajo Aquifer has benefited us. Simply look around. We have dilapidated infrastructure, dismal housing conditions, limited water supply, contaminated drinking water, limited scholarships, limited or no jobs, etc. Our socioeconomic conditions remain dismal while Peabody, NGS and their holding companies make significant profits from our resources. It is time to make a change in the structure of the coal leases so that our tribe, our villages, and our people can all benefit from sale of our resources:

Demand upfront payments for coal and water that will be the subject of the leases on an annual basis at fair market prices.

Increase the monthly royalties to reflect current fair market rates (instead of a minimum 12.5% and 6.25%).

Demand that Peabody complies with the leases and find alternative sources of water, other than using the Navajo Aquifer; and reclaim and repair the area including damages to the aquifers.

Limit the leases to coal and water, and exclude other “kindred” products.

About the author

Matthew Sakiestewa Gilbert is enrolled with the Hopi Tribe from the village of Upper Moencopi in northeastern Arizona. He is an Associate Professor in the Department of History and a Dean's Fellow and Conrad Humanities Scholar in the College of Liberal Arts and Sciences at the University of Illinois at Urbana-Champaign.

Email Subscription

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 805 other followers

Foreword to Kevin Whalen’s Native Students at Work: American Indian Labor and Sherman Institute’s Outing Program, 1900-1945

A Second Wave of Hopi Migration (History of Education Quarterly, August 2014)

Sun Chief: An Autobiography of A Hopi Indian by Don C. Talayesva, New foreword by Matthew Sakiestewa Gilbert (Sept. 2013)

Marathoner Louis Tewanima and the Continuity of Hopi Running, 1908-1912 (Western Historical Quarterly, Autumn 2012). Winner of Spur Award for Best Western Short Nonfiction, Western Writers of America (2013)